“MAA” – Son I Miss You 

Ok, This time no research post but one necked truth thought of our society.

Put your imperfections out of your mind and concentrate on what you value within yourself, Today?

We are often realize, how we bring joy and a spark of life to our parents. We are happy, we have the opportunity to share the talents, and God gave us in this way.

I will never forget a particular day when I visited a nursing home to see my father. I spoke to people sitting in wheelchairs and others who were seated beside walkers. As I stared into corridor, I noticed some of the visitors were sleeping.  Few were weeping and few were smiling.  After the visiting hours all the visitors returned to their destination, except one lady.

While I was passing through corridor, she came over to me to tell me something very eagerly. She desperately hugged me and then exchanged small talk.  She talked about her son.  Then she followed with words that literally broke my heart.

  "If you see my son will you tell him I miss him?"

I answered, "Sure, I will".  I hugged her.  For a few brief seconds I felt the pain she seemed to be feeling.

Now I don’t know the situation.  Her son could have been there just that morning.  Time doesn’t always register with elderly people. I am certain the days and hours have a way of running together when you seldom leave a place. But then on the other hand it could have been weeks or months or years since he had visited with his mother.  Too many people drop their loved ones off at a nursing home, vow to return often, but get busy and rarely return.

When my father was in a nursing home, I went to see him several times a week.  My mother spent most of her waking hours there in his room with him.  It wasn’t easy, especially since it was miles away from my destination.  But we were determined my father would know that we loved him, even after he forgot who we were.

I had to turn away from this sweet lady and wipe away a few tears.  Then I turned back around.

"My son is coming back to get me.  He is going to take me home," she announced.

I smiled and gave her another hug, wishing, it was true.  She walked slowly away.  But once again she turned around and faced me.

"Will you tell my son that I love him when you see him?" she asked.  I looked into her eyes and saw tears, beyond the smile, which automatically crossed her face just speaking of her son.

I don’t expect to ever see her son.  Actually, if I did, I wouldn’t even know him.

Therefore, in an effort to grant a sweet elderly lady’s heartfelt request. I decided to help her, she agreed and came at my home on request. While talking to her, I came to know her son never visited her since last 20 years, rather she doesn’t know his address but I found a letter she had written 20 years ago from her belongings.

Contents of Letter:

Dear Son:

Tomorrow is your wedding day and everything is ready, it’s hard for me to write these words and keep my fingers steady. I am so nervous thinking of so much to do that day. In 12 short hours I will give my little boy away.

I have so much to say to you before we walk the aisle, so I will write this letter even though it’s not my style. I thought it would be easier to write the words to you. Then I would not forget my thoughts as I so often do.

It’s hard for me to realize that you are twenty-five. It seems like only yesterday your life had just began. I remember your first steps and when you started walking. And "MAA" was your first word when you finally started talking.

I remember when papa coming home from work at six every day, then you would jump into papa’s arms and always you would say, "MAA" Pappa’s home from work and now we all can eat. Dinnertime with you and Papa would make my day complete.

After dinner you would always show papa and me something new. Something you had made for us or something you would do. Then you went to school and started growing up so fast, the little homemade arts and crafts became things from the past.

Becoming independent as you reached your teenage years. Learning how to deal with life and overcome your fears. My little boy was growing up and then I learned one thing, No longer could I keep him safely underneath my wing.

I had to let you venture out discover all that’s new even after papa left us. I think, it was the hardest thing I ever had to do. Many people can tell you as a parent it can be, Scary when you let your son finally be free.

You teach them right you teach them wrong your wisdom you impart. And then you set them free and let them follow their own heart. You guide them and you hope and pray the choices that they make. Create a life of happiness with every step they take.

So on this night before I give my little son away, I have written down the words and from my heart I’ll say. You’ve grown into a man from that little boy of mine. And I am proud to be your mother, you turned out just fine.

In my mind I’ll always see my son running wild. Playing all the little games when he was just a child. But tomorrow when I walk the aisle there on my side. Will be my proudest moment with my son, though I don’t know anything about the bride.

I love you more than life itself and I can only pray. As I march you down the aisle on your wedding day. You will be complete and happy when you say, "I do" Because you’ve made my life a joy and son "I love you."

1.     My son, I still believe in the institution of marriage.  But I also believe that you should marry for reasons of character and virtue and not for beauty and charm. I wholeheartedly believe that "Nothing is more discouraging for a man or woman to be married to a woman or man whom he / she discovers later he / she would not want as a waiter." 

2.     I still believe that sex should be saved for marriage, no matter how many times they jump in bed in those movies we love to watch.  I wish I had learned that lesson the hard way!

3.     I still believe you should be respectful to your elders, which is defined as anyone over the age from you.  They have been around the block a few times.

      Love,

    MAA

     (Husband name & Address)

The address mentioned in her letter is 350 mile away from my place. Some how I visited there and managed the address and phone numbers of her son.

I was scared to know the facts though, Next day, I called her son around 6 o’clock in the morning

"This is the emergency call for you. Your mother is with me last 7 days; I brought her from nursing home and she desperately wants to meet you.”

Her Son Answered:

“I knew she has been roaming around the nursing home last 20 years, for me she “MAA” is dead, Don’t Call me again for this and he cut the telephone line.”

My Thoughts:

a)     I am writing this post to tell everyone who has loved ones in long-term care facilities that your mother, father, aunt or uncle misses you very much.

b)    They would like for you to come visit with them.  Even though you may not be able to take them home with you, you can go to their meager home for a brief visit.  Your presence would make their day.

c)     And don’t forget — your family member loves you with all of his or her heart.

d)    And I am certain, just like this lady, they want you to know just how much.

e)     I still believe that you should always listen to your parents. 

Questions for Readers:

1.     What do you think, Can really “MAA” Die? I said "MAA" not mother!

2.     What about your scars and flaws?

3.     Do you define who you are?

4.     Do you really believe that other people care about what is only on the surface?

5.     Are you able to look beneath the beautiful person residing within?

Today, put your imperfections out of your mind and concentrate on what you value within yourself?

MSCI India Total Return Index and Indian Economy

Reverse Blogging Technique, Yes used Reverse Blogging technique to publish this blog, indeed my longest Post till now at ibibo blogsphare. What is Reverse Blogging Technique? 

The conclusions segment placed on top of the analysis section for readers to choose priority-reading segment wise. Segment 4 & 5 are the research portion for researcher, analysts and Economist and these two segments are quite critical section of this blog.  That is why I wrote this post in reverse order in terms of blog writing. Therefore, Reverse Blogging technique terminology have used by me.

This post is  bereif note of onging research work to formulate a concept paper  considering all emerging Stock Market variance and Critical Compositions of leading and important Economic factors to constitue a theory for Global Capital Market Index.   

 This Article complied into five segments are:

1.     Segment 1 – General (A modern theory to review the Indian Economy and Stock Market)

2.     Segment 2 – Conclusions of Segment 3 to 5.

3.     Segment 3 – MSCI Index (a Global Barometer to measure the Country Stock performance)

  4.  Segment 4 – E/P and PBV ratios to forecast average Capital market / investment returns

5.     Segment 5 - Macro Economic Factors to Evaluate Capital market / investment returns

Segment 1 - General

INDIAN ECONOMY – MODERN ECONOMIC THEORY

Indian Stock Market since liberalizations has undergone tremendous changes and has evolved as a vibrant system of investment flows. A dynamic capital market is an important segment of the financial system of any country as it plays a significant role in mobilizing savings and channeling them for productive purposes. The efficient fund allocation depends on the stock market efficiency in pricing the different securities traded in it. The modern financial theory focuses upon systematic factors as sources of risk and contemplates that the long run return on an individual asset must reflect the changes in such systematic factors. An enquiry into such systematic factors through different methodologies suggested in finance literature would help the policy makers, investors, to design their investment strategies meaningfully.

It is important to remember that India is a secular, long-term growth story. Even if the US slows down, Indian companies such as IT organizations are likely to benefit as global companies look to outsourcing to reduce costs. Additionally, economic activity is strong in India, whether it be infrastructure-related, telecom, port, airport, retail, investment in infrastructure in other parts of the economy, or capital expenditure, there’s been no slowdown. This level of investment on the ground is continuing to create jobs and increase consumption. This is good news for the economy and, as it feeds into corporate earnings, is positive for investors.

REVIEW – MODERN INDIAN ECONOMY

Does the Indian growth story still hold strong? And if so, does recent weakness represent a buying opportunity for investors? Perhaps the most important factor India has on its side is demographics.

Positive Side, India has the ideal demographic, with lots of young people supporting relatively few older ones. India is home to around quarter of the world’s under 25’s, with 60% of India’s population aged less than 30. Much of the booming service sector has been built on this young, well-educated, English-speaking population. The service sector now accounts for around 50% of gross domestic product (GDP) and, despite the irritation of some British consumers, the trend for outsourcing to India shows no signs of slowing. The recent survey report suggests that the middle class of around 13 million will rise to 140 million by 2025. This will be a consuming population, who are buying domestic goods and services and creating more jobs. It’s a virtuous circle. In few consumer goods sectors have seen spectacular levels of growth. The most obvious is in mobile telephony, where subscribers are growing at a rate of around 7.5 million per month. In general, it is domestic companies supplying these services. Apart, Strong growth is being seen in branded goods, consumer electronics and cars, while at the lower end, it is simpler things like toothpaste. Despite these positive trends, penetration of consumer goods is still small, leaving room for expansion. As per Survey, there are only around 16 credit cards, eight cars and four Internet connections per 1,000 of population. The other big driver has been infrastructure growth. Historically, infrastructure has always been the Achilles’ heel of India, now it is being seen as an investment opportunity. The government has earmarked between $400bn and $450bn to spend on infrastructure. The strength of this internal demand also means that the economy is not as reliant on exports - and therefore the world economic climate - as some other major emerging markets. Only a small percentage of GDP - about 13% - is export-driven. This means that India will keep growing even if the world economy falters. All these factors have helped generate India’s robust GDP growth of around 9% per year, marginally below China, but above that of Russia and Brazil. If that could be maintained, India would be on course to become the world’s second largest economy after China within 30 years.

INDIAN STOCK MARKET REVIEW

The stock market has also broadened out. Indeed, 15 years ago there were only 40 companies, which were large and liquid enough for investment. Now the relevant universe is 900 stocks, with plenty of new sectors such as media, infrastructure and property. This has been expanded by government privatizations and other flotation. Not all of these have gone to plan, however, and shares in Reliance Power dropped sharply after its $3bn flotation. But it is difficult to ignore the fact that the Indian market now trades at a substantial premium to other emerging markets.

Emerging markets have provided a safe haven, despite their ‘risky’ perception. The levels of risk within Asian companies are not as high as some of those in developed markets. There are some excellent global funds available, which provide an allocation to India, but also other regions around the world and are actively monitored and managed to change the percentages held to suit market conditions. The growth story in India is sound. Well-run companies continue to deliver good earnings, fuelled by massive infrastructure development and a growing consumer economy. These factors are unlikely to reverse. India is also lightly exposed to the fortunes of the global economy and could therefore outperform if the US turns down. However, valuations are relatively high even after the recent falls in price and other emerging markets may offer better short-term value.

Year 2008, the economic news has remained buoyant, supporting claims that India’s domestic strength insulates it against world economic turmoil. But investors’ waning appetite for risk has sliced 14% off the Indian stock market since January 1 2008. Last year, burgeoning consumer spending and much-needed infrastructure growth helped the Morgan Stanley Countries’ Index (MSCI) India deliver a 71% return, the highest of any major Asian market.

 Late in the month of Year 2007 and beginning of 2008, the market declined sharply as investors became concerned about deteriorating conditions in the US housing market and the impact this could have on the US and global economies. However, it retraced some of these losses after the Reserve Bank of India left its key interest rate unchanged. The central bank did increase the Cash Reserve Ratio by 0.5 percentage points to 7.0%, however investors judged this increase to be offset by the removal of the cap on funds the central bank can absorb each day from lenders.

Segment 2 – Conclusions

Conclusion – Segment – 3

The Indian stock market has been a beneficiary of investor’s high global risk appetite over the past four years. Each time risk appetite has been threatened, Indian equities have corrected sharply, reflecting the market’s quite volatile nature.

 We are now going through another attack on global risk appetite. The MSCI India Index has declined 14% since the end of July, because investors have become concerned about deteriorating conditions in the US housing market and the impact this could have on the US and global economies. Risk is being priced in, and whether this proves to be temporary, as it was in February this year and May last year, or permanent - and thus signals the end of the four-year bull market - is difficult to determine. However, there are a number of factors that continue to support the Indian stock market. 

Conclusion – Segment – 4

SUMMARY AND CONCLUDING REMARKS

 This analysis is an attempt to uncover tools like E/P and PBV ratios to forecast longer horizon average market returns in emerging equity markets. We pool market averages of E/P and PBV for all emerging equity markets and try to see if they are related with 3, 6 and 12-month future returns. First, we rank the pooled observations with respect to E/P (PBV) and group them into quintiles. When we relate grouped E/P (PBV) values to future returns, we find that returns are higher after observing a high E/P (low PBV) in a market. Two sets of econometric tests are invoked to test the statistical relationship between E/P, PBV and future returns. Initially, we employ methodology to control for worldwide risk in an international CAPM framework. Next, we undertake a time series - cross sectional estimation of international CAPM models. Although FM method does not provide significant coefficients, E/P and PBV appear to predict future returns in pooled estimation. However, explanatory powers are very low in shorter return horizons.  The fact that fundamental variables are related with future returns in less developed, diverse markets have strong implications for asset pricing in general. These variables have been shown to explain cross section of expected returns in developed markets. Yet they do not easily lend themselves to a model of capital market equilibrium; such findings are still regarded as an empirical regularity yet to be explained. Similar phenomenon in emerging equity markets is not therefore very puzzling. In terms of forecasting ability, the relationship between E/P, PBV and future returns are encouraging, but not very promising for the potential investor. One has only got to consider the low explanatory power of the models estimated in this study. 

       Conclusion – Segment – 5

SUMMARY AND CONCLUDING REMARKS

Analysis in return generating functions indicates the shortcomings of CAPM due to its too much dependence on one-single factor. On the other hand, the major shortcoming in case of APT is that the factors determining the asset returns are not associated with economic variables. The empirical models brought out by select analysts linking certain macro economic variables to asset returns found using insufficient number of variables as well not able to find any superior performance over the traditional CAPM and the APT.

The purpose of the present analysis is to explore into the role being played by a good number of macro economic variables when reduced into a manageable number of economic factors. Thus the study is likely to incorporate a multifactor return generating process into the traditional CAPM such that the resulting model is capable of directly utilizing the macro-economic variables in defining factors.

 The Analysis observes that at least three very significant factors likely to influence the returns of assets during the employed data period.  1.     The first factor encompasses economy-wide variables like industrial production, agricultural production, interest rate and money supply as well foreign exchange reserves, etc.  2.     The second factor characrises by inflation in its different manifestations.  3.     The third factor concentrates on industrial production. Interestingly the volume of turnover in two major stock exchanges found a place in the estimated factors indicating the role of demand and supply forces at market ring. The risk – return relationship is tested for individual scrips as well as etaranked portfolios using the sample of BSE-100 companies and BSE-SENSEX as market proxy for the latest 60 months data ending December 2007. The systematic risks corresponding to the factors are found properly priced in all the three models, the traditional CAPM, three-factor Macro economic Factor model and the Five-factor APT. On the basis of R2 value the Economic-factor model and the APT found to better explain the relationship than the traditional CAPM. The efficiency of the three models tested by using the forecasting errors. While the traditional CAPM is found overestimating the returns the Macro-economic factor model as well as the five-factor APT found underestimating the actual returns. However, the standard deviations of the errors are found relatively smaller in factor model thus justifying the present analysis. 

Segment 3 – MSCI Index 

MSCI INDEX - MSCI India Index and MSCI & MSCI India Total Return Index 

Global Evolution of Indian Equities: 

Except as otherwise noted, all information regarding the Index provided in this pricing supplement is derived from MSCI or other publicly available sources. Such information reflects the policies of MSCI as stated in such sources, and such policies are subject to change by MSCI. We do not assume any responsibility for the accuracy or completeness of such information. MSCI is under no obligation to continue to publish the Index and may discontinue publication of the Index at any time.  The Index is a free float-adjusted market capitalization index that is designed to measure the market performance, including price performance and income from dividend payments, of Indian equity securities. The Index is calculated on a net basis, approximating the minimum possible dividend reinvestment (dividends are reinvested after deduction of withholding tax, using the rate applicable to nonresident individuals who do not benefit from double taxation treaties). As of October 17, 2007, the Index was comprised of the top 62 companies by market capitalization listed on the National Stock Exchange of India (the “NSE”). The Index is calculated by MSCI and is denominated in U.S. dollars. Securities eligible for inclusion in the Index include equity securities issued by companies incorporated in India. The shares of those companies are mainly traded on the NSE; however, in cases where such prices are not available due to the delisting from the NSE, official closing prices from the Bombay Stock Exchange (“BSE”) may be used. The NSE was established at the behest of the Government of India in November 1992, and the capital markets segment-commenced operations in November 1994. As of the end of September 2007, there were 1,319 companies listed on the NSE. Trades executed on the NSE are cleared and settled by a clearing corporation, the National Securities Clearing Corporation Limited, which acts as a counter party and guarantees settlement. The weighting of a company in the Index is intended to be a reflection of the current importance of that company in the market as a whole. Stocks are selected and weighted according to the same consistent methodology that is applied to all MSCI Indices, as described below. The reason for a company being heavily weighted reflects the fact that it has a relatively larger market capitalization than other, smaller Index Components. The Index Components are frequently reviewed to ensure that the Index continues to reflect the state and structure of the underlying market it measures. The composition of the Index is reviewed quarterly every January, April, July and October. As of October 17, 2007, the Index had a market capitalization of approximately $252.8 billion. As of such date, the top 50 Index Components were as follows (in alphabetical order):